1.Unending slowdown (The Hindu)

2.A blind eye (The Hindu)

1.Unending slowdown (The Hindu)

Synoptic line: It throws light on the India’s GDP growth rate which is in its slowest pace. (GS paper III)

Overview

  • GDP growth in the first quarter of 2017-18 was at 5.7 per cent, it was way lower than consensus estimates by Reuters (6.6%) and Bloomberg (6.5%). The reasons for the protracted slowdown a slide of five straight quarters from 9.1% in March 2016 are many and varied.
  • Both supply and demand were impacted due to a combination of demonetisation, implementation of goods and services tax (GST), weak domestic and external demand, and input prices.

Assessment

  • GDP growth is on a secular declining path from October-December 2015. It had declined from 9.1% in October-December 2015 to 6.1% in January-March 2017 and finally to 5.7% in April-June 2017. All components of final demand, whether private consumption, government consumption, investment and net exports, are on a declining trajectory.
  • The industrial output grew by 3.1% in the previous quarter. Analysts reckoned this to be the worst quarter for the manufacturing sector in five years, with growth at 1.2% compared to 5.3% in the previous quarter and 10.7% in the same quarter last year. That mining activity also shrank by 0.7%, compared to a 6.4% growth last quarter.
  • The sector-specific trend shows that manufacturing expansion in gross value added (GVA) terms, has slackened to a near stall at 1.2%. This, from 5.3% in Q4 of the last fiscal and 10.7% a year earlier, is a far from heartening sign.
  • Agricultural growth has been declined to 2.3% from 5.2% in January-March 2017 and 2.5% in April-June 2016. In view of record food grain production, it appears the shortfall is mainly due to the underperformance of allied sectors, namely dairy, fisheries etc.
  • Investment growth, albeit at a mere 1.6% in April-June 2017, is a silver lining. Although growth is much lower than same period last year, it has reversed the declining trend since April-June 2016.
  • It has been stressed that a large part of this dip was due to a rise in input costs as well as an unprecedented “high level of inventory de-accumulation” in the first quarter as firms were worried if the GST regime would grant them input tax credits for output generated before its implementation.
  • According to the Finance Minister the challenge before the government now is to work out both policy and investment measures to boost momentum. It can suspend the fiscal road map for a limited period in order to pump prime the economy through increased capital spending by the government.
  • The risks of fiscal loosening are of course manifold, especially at a juncture when several State governments have either announced or are contemplating large-scale farm loan waivers, which would push up interest rates and crowd out fresh lending.

Way ahead

  • With finding new incentives to rebound at a higher pace in the coming quarters resulting in an egalitarian equation to previous year’s achievement. The incentives might be creating a new line of jobs, circulating extra money in the market system, setting up manufacturing units and many more. There is need to find the way for sharp recovery in the second half of the year which can still push economic growth.

Question– Explain the challenges faced by Indian economy, due to combination of demonetisation, implementation of goods and services tax (GST).

2.A blind eye (The Hindu)

Synoptic line: It throws light on the issue of Myanmar that how for not addressing the Rohingya issue diminishes its democratic transition. (GS paper II)

Overview

  • The continuing failure of the Myanmar government to act decisively and urgently to protect civilians from the raging crossfire between the security forces and insurgents. The Arakan Rohingya Salvation Army (Arsa) had launched coordinated attacks on the police and army outposts in Rakhine. Equipped with homemade explosives, machetes and small arms, the militants attacked security forces.
  • The recent clashes in the western State of Rakhine have claimed many lives and forced thousands of Rohingya to flee across the border into Bangladesh, in a rapidly deteriorating humanitarian crisis. According to the UN’s International Organisation for Migration, most of the victims are women and children.
  • Recently the Indian government had said that illegal immigrants like the Rohingyas pose grave security challenges as they may be recruited by terror groups and had asked state governments to identify and deport them.
  • Prime Minister of India will also visit to Myanmar this week, visit assumes significance because of mainly two reasons, first Beijing has been trying to wield an influence on Myanmar since the 1990s and secondly his visit also comes in the backdrop of India’s decision to deport the Rohingya Muslims.

Recent attack and UN report

  • The militants suspected to be from the Arakan Rohingya Salvation Army attacked military and police outposts, it should have served as a caution against an excessive counter-insurgency operation, a real possibility given the history of systematic persecution of the Muslim minorities in Rakhine.
  • The military crackdown that followed has been widely condemned as disproportionate and the government accused of being an onlooker. The UN High Commissioner for Human Rights has even rebuked Aung San Suu Kyi’s office. She has failed to exert any moral pressure to secure humane treatment and humanitarian assistance for the systematically persecuted Rohingya. She has rightly come under criticism for her continued silence over the army brutalities.
  • According to the UN agency’s report based on a study of the military crackdown described the slaughter of thousands and displacement of even larger numbers as crimes against humanity. But the reactions of the radical Buddhist nationalists, who have traditionally resisted recognition of the Rohingya as citizens of Myanmar, have been predictable. They have demanded even tougher action from the government in the wake of the terror unleashed over the past week.
  • Ms. Suu Kyi bears responsibility for what is happening in Rakhine now because her party rules, not the junta. For decades, Myanmar persecuted the Rohingya people while the world ignored their plight. By all accounts, that situation has not changed.

Way forward-

  • Though the Myanmar government has an obligation to act on the recommendations of the Commission, on the guarantee of citizenship rights to the Rohingya, freedom of movement and enforcement of the rule of law but it is inconceivable that the country’s yearning for peace and normal life could be fulfilled in the absence of these minimum prerequisites.
  • The ruling National League for Democracy, which takes legitimate pride in its heroic defiance of the military junta, has a largely unfinished agenda on democratic transition.

Question– Do you consider the India’s decision to deport the Rohingya Muslims right? Explain in the backdrop of humanitarian crisis faced by the Rohingya people?